DS 98-010
Kearsarge Telephone Company
Request to Remove Certain Usage and Billing Charges from the ISDN
Tariff and Make Adjustments to Service Establishment Charges to
the ISDN-PRI Tariff
Order Extending Time for Review by 30 Days
O R D E R N O. 22,864
March 9, 1998
On February 9, 1998, Kearsarge Telephone Company (KTC)
or Company) petitioned the New Hampshire Public Utilities
Commission (Commission) for authority to remove Circuit Switched
Usage charges and Message Detail Billing charges from the ISDN-Basic and ISDN-Primary tariffs pursuant to RSA 374:22 and RSA
374:26. In addition, KTC petitioned to make amendments to the
service establishment charge in the ISDN-primary tariff.
KTC seeks to remove usage and billing charges from the
tariff because customers, according to KTC, are unable to predict
their monthly charges and are therefore less likely to purchase
ISDN service. Thus, removal of usage based charges should
increase sales of ISDN and help recover foregone revenue. The
proposed amendment to the service establishment charge tariff
includes new language waiving the service establishment charge
for customers agreeing to subscribe to the service for a minimum
period of three years.
Staff has reviewed the petition and recommends that the
Commission deny the request. On February 3, 1998, staff received
from the Company information indicating that there are currently
not enough ISDN customers to recover the cost of providing the
service. Staff is concerned that eliminating a source of revenue
such as a usage charge may exacerbate the problem of cost
recovery.
Staff recognizes that a usage based charge discourages
customers from purchasing ISDN services. However, because the
petition does not include demand forecasts supporting claims of
ISDN sale increases, staff is unable to assess the impact the
proposed changes will likely have on the Company's prospects of
recovering the cost of providing ISDN service. In addition,
staff believes the proposed amendments waiving service
establishment charges for customers subscribing to ISDN services
for a three year period may adversely impact the development of
competition. Staff avers that arrangements such as the one
proposed by the Company have the effect of removing certain
customers from the market before competitors have the opportunity
to provide service. Staff admits that, in the near term,
competitive markets are not likely to develop in small
independent telephone company service areas. Nevertheless, Staff
is concerned arrangements similar to that proposed by the Company
will have a precedential effect in other service areas.
We have reviewed the petition and Staff's
recommendation. We commend the Company for attempting to
alleviate the problem of under-recovery for ISDN service by
repricing the tariff to attract additional customers. However,
we are concerned by the Company's lack of detail in support of
its proposal.
In our Order No. 22,839, (January 21, 1998) we found
that Hollis Telephone Company stockholders should bear the cost
of providing ISDN services if, at the time of a future rate
proceeding, the demand for ISDN was below the number of ISDN
customers necessary to cover the cost of providing ISDN service.
In this case, the Company has not provided the number of
customers it needs at the proposed rate, to fully recover its
costs. We will therefore, consistent with RSA 378:6, IV, extend
the time for review of this petition for 30 days and order KTC to
provide the information necessary to insure that ISDN customers
or stockholders fully cover the cost of providing ISDN service.
We are also concerned about the waiver of service
establishment charges on potential competition and will direct
the Company to justify this proposed amendment or reconsider the
term. We suggest one possible solution to balance the interests
of the Company with the interests of competition is consideration
of a fresh look opportunity similar to that directed in Order No.
22,798 (December 8, 1997). If a fresh look opportunity is
available to KTC customers under a three year term, at the time
competition develops in the Company's franchise territory, the
concern may be allayed.
Based upon the foregoing, it is hereby
ORDERED that pursuant to RSA 378:6, IV, the time for
review of this petition is extended for 30 days; and it is
FURTHER ORDERED, that KTC file information necessary to
insure that either ISDN customers or stockholders cover the cost
of ISDN under the proposed rates; and it is
FURTHER ORDERED, that the Company file its position on
the Commission's concern regarding the effect of competition on a
three year term commitment in exchange for waiver of the service
establishment charge.
By order of the Public Utilities Commission of New
Hampshire this ninth day of March, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary